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Prospects have brightened for green reforms to a controversial international treaty that protects fossil fuel investments, as ministers of European Union states agreed on Thursday that countries can still choose to support the reforms despite the bloc’s decision to quit the pact.

In a statement, a gathering of EU ministers called the Council of the EU said the decision “unlocked the process of modernisation of the Energy Charter Treaty (ECT) for its non-EU contracting parties”.

The compromise allows the EU as a body to withdraw from the treaty, while individual EU member states can stay in and approve the green reforms at a conference due to take place this year, if they wish.

The ECT currently allows all energy companies – including coal, oil and gas firms – to sue governments over climate and other policies they see as a threat to their current and future profits.

The proposed reforms to modernise the ECT, which are due to be voted on in November, would make it easier for ECT countries to prevent the treaty being used as a basis for lawsuits involving fossil fuel assets that are affected by green economy measures.

However, with several European countries already filing their notice to leave the ECT, it is unclear whether a sufficient number of EU states will stay in the treaty long enough to get the reforms approved. As part of today’s EU Council agreement, the EU confirmed it would leave the treaty.

Other ECT member states, including Japan and Kazakhstan, only grudgingly agreed to back the reforms under pressure from the European Commission.

For the ECT “modernisation” proposal to be adopted, none of the treaty’s member governments – now numbering 49 – must vote against it at November’s conference. Then three-quarters of ECT members need to ratify the reforms for them to take effect.

If the reforms fail, the ECT’s members across Europe and Asia will be unable to remove its protection for fossil fuel investments and – due to a 20-year sunset clause – even EU countries that have left would be exposed to lawsuits for that period.

Post-Soviet treaty

The ECT was conceived in the 1990s to boost investment flows between Western and post-Soviet countries. But its provisions to deter states from grabbing private assets have since been used by energy companies to fight back against climate policies.

In 2020, a British oil and gas company sued Slovenia over what it called “unreasonable” environmental protections”, while German energy company Uniper threatened to sue the Dutch government for €1 billion ($1.1bn)  over its coal phase-out plans.

In lawsuits brought under the ECT last November, British oil company Kelsch is suing the EU, Germany and Denmark for at least 95 million euros ($102m) over a windfall tax on energy firms.

G7 offers tepid response to appeal for “bolder” climate action

The European Commission reacted to these and other cases by attempting to remove fossil fuels from the list of investments protected by the ECT – with the aim that it would apply only to clean energy assets.

For two years, efforts by EU negotiators were repeatedly blocked by Japan and Kazakhstan. But in June 2022, a “flexibility mechanism” was agreed that would allow ECT states to end protection for fossil fuels, as long as no other ECT state objected.

Europe divided

Despite European Commission negotiators finally winning this right, EU member countries were divided on how to apply it.

Governments like France, Spain and Luxembourg wanted to immediately end protection for fossil fuel investments but faced push-back from several Eastern European countries.

They agreed a compromise to stop protection for new fossil fuel investments but to continue it for existing investments for ten years – a decision that angered climate campaigners.

Southern Africa drought flags dilemma for loss and damage fund

Friends of the Earth’s Paul de Clerck said at the time it would “lock the EU in fossil fuel investment protection” for a decade.

Despite this agreement, by the time the annual ECT conference came around in November 2022, EU governments no longer unanimously backed the reforms the European Commission had negotiated, and so they were shelved.

Locking in Asian fossil fuels

The EU’s stalling on the reforms drew an angry response from then head of the ECT secretariat, Guy Lentz of Luxembourg.

In a letter to the leader of the European Parliament in February 2023, he warned that if the EU withdrew as a bloc before approving the modernisation, it would amount to “an express prohibition” for other ECT members to better align with the Paris Agreement on climate change.

Tensions rise over who will contribute to new climate finance goal

He added that failure to agree reforms would essentially allow fossil fuel companies to sue EU states for longer because of an existing 20-year sunset clause, which means energy companies can bring lawsuits against governments for two decades even after a country leaves the treaty.

EU states wanted to neutralise this sunset clause by agreeing a side deal between themselves not to apply the treaty. But Lentz said these attempts “may not provide the expected legal certainty”. Campaigners accused him of “bluffing”.

Numbers game

EU countries then continued to debate among themselves whether to stay in or leave the ECT and – if they withdrew – whether to modernise it before exiting.

Despite the ongoing talks, France, Germany and Poland officially left the ECT in December 2023. Luxembourg and Slovenia will leave in June and October 2024 respectively. Portugal, the UK, Spain and the EU will leave next year.

This debate was resolved today, with EU states’ ministers agreeing to a compromise, brokered by the Belgian government. Governments that want to can stay and support the modernisation, but the EU itself can start process of exiting right away.

Belgian energy minister Tinne Van der Straeten said her government had “worked tirelessly to break this complex deadlock and found a balance acceptable and useful to all”.

The deal essentially makes the reforms contingent on timing and EU countries’ commitment to reform.

By November, after Luxembourg and Slovenia exit, there will be 47 ECT member states, including 22 from the EU. Eleven more – including the United Kingdom and Switzerland – are in Europe but not in the EU. Nine others are in Central Asia and three in the Middle East, with Japan and Mongolia the remaining two.

E3G analyst Eunjung Lee said ECT modernisation “is still uncertain” but added “with the EU Council decision today, it is probable that the modernisation might pass, particularly if the voting takes place via correspondence”.  

The ECT approved this option in October 2022. It means the conference’s chair sets a deadline by which any objections should be sent in.

“This will make things easier than voting at a conference, because unless there is a clear objection, the modernisation will be adopted”.

But even if the reform is approved, Lee said the ratification by three-quarters of countries “could take forever”.

De Clerck of Friends of the Earth agreed, saying “it is unclear if the reform would ever be ratified”.

(Reporting by Joe Lo; editing by Megan Rowling)

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UN chief urges countries to adopt fossil fuel transition plans with timelines

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The head of the United Nations has called on all countries to deliver plans for phasing out their production and consumption of fossil fuels, as rising oil prices and climate shocks threaten energy and human security.

In his farewell speech to the UN General Assembly (UNGA) in New York on Tuesday, outgoing UN Secretary-General António Guterres for the first time urged “every government to adopt a national plan to transition away from fossil fuels” aligned with limiting warming to 1.5C. The plans, he said, should include “clear timelines and protection for affected workers and communities”.

“We know fossil fuel interests won’t step aside on their own. For decades, Big Oil has treated the atmosphere as an open sewer – and cashed in on the consequences,” Guterres told diplomats in his speech opening the leaders’ segment of the assembly, also calling out the industry’s windfall profits after Russia’s invasion of Ukraine.

    At last year’s COP30 climate summit in Belém, a group of about 80 governments led a failed push to develop a global roadmap to transition away from fossil fuels. Brazil instead proposed to draft a voluntary report that will be presented this year ahead of COP31 after countries and organisations submitted their views to the process.

    Governments first agreed to transition away from fossil fuels in energy systems at COP28 in Dubai in 2023, but have since failed to agree at UN climate talks on how to move forward with that commitment, as efforts to do so have been effectively blocked by large fossil fuel-producing countries.

    France, Netherlands issue plans

    A few countries have moved forward with their own transition plans. France launched the first one at an international conference on the issue in April and the Netherlands followed suit this month. Not being major fossil fuel producers, both European nations aim to end their coal, oil and gas consumption by 2050, although the Dutch plan was criticised for not setting specific phase-out dates for the dirty fuels.

    Adão Soares Barbosa, climate ambassador from Timor-Leste and chair of the Least Developed Countries (LDC) group in the UN climate negotiations, told a press briefing on Tuesday that last year’s discussions on shifting away from fossil fuels need to continue at COP31, adding that developed countries should lead the way with transition plans and curb their use of fossil fuels.

    “We are expecting that we can make a request to major-emitting countries to limit emissions from this sector,” he said. “For LDCs, we’ll also try to reduce fossil fuel use, but it will depend on national circumstances.”

    Samoa’s lead negotiator Anna Rasmussen said small island states have outlined their energy transition plans in their nationally determined contributions (NDCs) – countries’ plans for meeting the Paris Agreement goals – but added “we’re still waiting” for climate finance to help implement those plans.

    Despite the global push to clean up the energy mix, countries leading climate talks are themselves also expanding fossil fuel production. COP31 co-presidents Australia and Türkiye have both recently given the green light to mine and drill more coal, oil and gas, and still depend on fossil fuels for 60% and 56% of their electricity production respectively.

    Fossil fuel expansion threatens COP31 hosts’ credibility, experts warn

    COP30 host nation Brazil has also persisted with its plans to explore potential new oil reserves near the mouth of the Amazon River – a region known as the Equatorial Margin.

    These are moving ahead despite President Luiz Inácio Lula da Silva announcing last year at the Belém climate summit that the country would develop its own fossil fuel phase-out plan. This is still under development with little information about its progress and may be hampered by elections next month.

    “We have achieved our self sufficiency in oil and will continue to explore the potential of new reserves, such as those in the Equatorial Margin,” Lula said in his speech to the UNGA on Tuesday. “But we will not abandon the environmental agenda,” he insisted. “We will move forward with the roadmap for the decarbonisation of the Brazilian economy.”

    Transition far cheaper than status quo

    Speaking at the main Climate Week NYC venue, Mads Christensen, executive director of Greenpeace International, said given the fast-shifting cost dynamics for both fossil fuels and renewables, countries should revise their existing energy plans because they are now out of date.

    Gas power generation now costs around 150 euros per megawatt compared with around 50 euros for solar with battery storage – making the latter two-thirds cheaper.

    “If these plans were updated, I think we would have a much faster transition because it simply makes good financial sense,” he said.

    A technician walks next to solar panels that partially provide electrical power to the Grand Mosque of Istiqlal in Jakarta, Indonesia (Photo: REUTERS/Willy Kurniawan)

    A technician walks next to solar panels that partially provide electrical power to the Grand Mosque of Istiqlal in Jakarta, Indonesia (Photo: REUTERS/Willy Kurniawan)

    Tzeporah Berman, founder and chair of the Fossil Fuel Treaty Initiative, told Climate Home News that the Santa Marta process for transitioning away from fossil fuels (TAFF), launched at April’s conference, could help countries discuss, design and develop their national roadmaps, as well as mobilise the international cooperation required to actually deliver them.

    “Many countries want not only national roadmaps but a global roadmap off the highway to hell,” she added. “A global plan is necessary to ensure the rules aren’t rigged against those who want to do the right thing and so all countries can make credible commitments.”

    The second TAFF conference will be held in the Pacific island nation of Tuvalu next spring, co-chaired by Ireland. In New York, Tuvalu’s climate minister Maina Vakafua Talia called for stepped-up efforts to tackle the fossil fuel use that is threatening his country’s “demise” by driving global warming.

    “The world is running out of time, and so I ask every government to come to… Tuvalu with solutions – real solutions, not false solutions – for us to ensure that we have a pathway and a way forward,” he urged.

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    Climate Change

    COP31 electrification pledge leaves out clean power commitment

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    COP31’s flagship initiative to accelerate the electrification of the world’s economy has been criticised for failing to include a commitment to produce the power from clean energy.

    Governments that sign the voluntary pledge at this year’s UN climate summit will commit to increasing electricity’s share of total energy consumption to 35% globally by 2035 in line “with pathways consistent with keeping 1.5C alive”, the text unveiled by the Turkish presidency on Tuesday says.

    While the document says that the electrification goal is “complementary to efforts to expand renewable energy and improve energy efficiency”, governments are not explicitly asked to commit to producing the extra power with clean sources and driving down greenhouse gas emissions.

    The text instead says the “use of clean electricity” will vary according to national circumstances. Fossil fuels are not mentioned by name, although the pledge cites the COP28 Global Stocktake decision, which called for “transitioning away from fossil fuels” in energy systems.

      COP31 president Murat Kurum said earlier this month that the push to make electrification more “widespread” – through measures like the rollout of electric vehicles and heat pumps – will “automatically” lead to a reduction in the use of fossil fuels.

      But many campaigners disagree, criticising the proposed pledge for failing to give an explicit signal on the fossil fuel transition.

      Lack of clarity on energy sources

      “Let’s not let electrification become the Trojan horse of our times, used to hide new fossil fuel consumption rather than promote renewable energy,” Claire Smith from civil society umbrella group Beyond Fossil Fuels said in reaction to the pledge’s publication.

      She added that the commitment will only help address the climate crisis if electrification is powered by a flexible energy system where solar and wind are complemented by enhanced grids and storage.

      The pledge’s text says that the electricity goal should be supported by “diverse and sustainable energy sources”, but it stops short of explaining what these sources are.

      Alden Meyer, an international climate policy expert and senior associate at think-tank E3G, said the details of the pledge matter to how effective it will be in helping bring planet-heating emissions down.

      “It has to be clean, and we haven’t got enough clarity on a guarantee that it will be a decarbonisation move,” he told Climate Home News.

      China’s industrial engine starts to break its fossil fuel habit

      According to an annual electricity review from energy think-tank Ember, in 2025 renewables edged ahead of coal power for the first time in 100 years. Continued growth in solar and wind pushed the share of renewables above a third of global electricity generation to just under 34%, compared with coal at 33%, it said.

      Janet Milongo, energy Transition lead at CAN International, said success cannot be measured simply by how much of the world’s final energy consumption becomes electric.

      “We must ask what generates that electricity, who has access to it, who owns the infrastructure, and whether it is helping communities transition away from fossil fuels,” she added.

      Electrification alone can’t meet climate goals

      Analysis published by the IEA on Tuesday, alongside the pledge, found that it would already be cost-effective to raise electricity’s share of global energy use from 23% today to around 33% with existing technologies, putting the COP31 goal “within striking distance”. Based on current policies, however, the share reaches only about 30% by 2035.

      Hitting the 35% target would cut fossil fuel importers’ import bills by around $400 billion a year by 2035, the IEA said. At the higher prices caused by the conflict in the Middle East, that saving rises to more than $500 billion.

      Speaking at New York Climate Week on Tuesday, IEA executive director Fatih Birol said the agency’s figures show that in 2026, about 80% of all new power plants built will run on renewables, with a few percentage points coming from nuclear power and the rest from fossils fuels. “So therefore, electrification itself will lead reduction of the [greenhouse gas] emissions,” he added.

      IEA Executive Director Fatih Birol speaks at Climate Week NYC on September 22, 2026 (Photo: Megan Rowling / Climate Home News)

      IEA Executive Director Fatih Birol speaks at Climate Week NYC on September 22, 2026 (Photo: Megan Rowling / Climate Home News)

      However, the IEA warned in its new report that electrification “by itself is not enough” to meet the world’s climate targets. It noted that, if “low-emission” sources of power continue to simply grow in line with current policy scenarios, that would be only just enough to cover the extra demand from electrification, driving a modest decline in emissions.

      Matt Webb, associate director of global clean power diplomacy at E3G, said the pledge is a “welcome signal of leadership” and can help COP31 be a “critical moment” for countries to double down on the energy commitments made at COP28.

      But to secure the full benefits of electrification, he added, it is essential that we “urgently clean up” by speeding up the rollout of renewables and developing credible national plans to transition away from fossil fuels.

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      As loss and damage fund stalls, Nepal crowdfunds flood relief

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      People around the world have donated almost $90 million to a government-led campaign to help Nepal recover from its recent devastating Himalayan flood, according to a Nepali climate negotiator, even as the UN chief slammed the tiny amount of money in a new fund to deal with such disasters.

      Individuals and companies from Nepal and abroad have chipped in from $5 to “many millions” of dollars to the Prime Minister’s Disaster Relief Fund, Manjeet Dhakal, an advisor to the poorest countries at UN climate talks, told an event on Monday focused on early warning systems.

      The prompt and substantial response from the public contrasts with the slower, more limited support that is potentially on offer from the UN’s new Fund for Responding to Loss and Damage (FRLD), set up by governments to compensate developing countries for climate disasters.

      Comment: Human security relies on adapting to the world’s new climate reality

      Over three weeks have passed since Nepal’s finance and environment ministers asked the FRLD board to take an urgent decision to allocate funding to help Nepal protect people and restore essential services in the wake of the disaster, which caused around 1,450 deaths and left more than 5,000 people missing.

      “Time is of the essence,” the ministers wrote in an appeal to the FRLD on August 31, which was swiftly followed by a letter from a group of developing-country board members urging the FRLD board’s co-chairs to organise an extraordinary meeting to come up with a response.

      Loss and damage fund hesitates

      Yet, despite informal online meetings, the co-chairs have yet to convene a meeting with the power to allocate funds. The board’s next scheduled meeting begins on December 15.

      Dhakal said on Monday that the request has “received some positive response, but still there is some discussion ongoing about how to respond to that”.

      “If they can’t respond in a timely manner, then is [the fund] fit for purpose in terms of disasters that the world would be facing in the coming years? The scale and intensity of these disasters is increasing,” he said.

      With just $820 million pledged to it by rich countries and not all of that yet delivered, the FRLD has earmarked just $350 million to spend in its initial phase and without further contributions could run out of money next year.

      Because of these limited funds, and a huge number of requests for funding totalling nearly $3 billion, the FRLD has said it will only give out a maximum of $20 million to each project for now. It has yet to approve funding for any projects.

      Dhakal recently told The Nation magazine that this amount was just a “symbolic gesture”. Nepal’s government has estimated the costs of recovery and reconstruction at $4.8 billion, with homes, roads, bridges, hospitals and hydropower stations in the affected area needing to be repaired and rebuilt.

      “Ridiculously small” funding

      In a speech to the UN General Assembly on Tuesday, the body’s outgoing Secretary-General António Guterres criticised the “ridiculously small” level of funds made available by wealthy governments to the FRLD. Developed countries should “make the loss and damage fund work at scale”, he said.

      Secretary-General António Guterres speaks at UNGA (Photo: UN Photo/ Loey Felipe)

      The Portuguese diplomat told world leaders that when he travelled to Nepal three years ago, he had “sounded the alarm on accelerating glacier melt, warning that the rooftops of the world are caving in”.

      “Some dismissed it all as overstating dangers, but as tragic events have shown, impacts are arriving sooner, hitting harder, and spreading further than many anticipated,” he said.

      A recent study by scientists with the World Weather Attribution group found that climate change contributed to the rock-ice avalanche which sparked a huge flash flood along a river valley on the Nepal-Tibet border.

      Speaking at a separate event in New York on Monday, leading climate scientist Johan Rockström highlighted those findings on the role of global warming in the Himalayan disaster.

      “This will be potentially the first poster-child case of a loss and damage invoice, because here we have a proven case of a catastrophe which would not have occurred if it hadn’t been for human-caused climate change,” he said.

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